Secretary_of_State_for_Culture,_Media_and_Sport_Sajid_Javid
Image: © FCO via Wikimedia Commons

Tories claim Labour wants to increase your tax bill by £2,400

A big row has broken out over whether Labour's spending plans are feasible or, as Sajid Javid put it, "fantasy economics".

Campaigning for the upcoming UK election is underway, and there’s been lots of drama around how much money the Labour Party’s would spend if it won. Sajid Javid, the Chancellor of the rival Conservative Party, has said that the Labour Party has not been honest about how much taxes would be put up, and that their plans would cost each UK worker £2,400 a year more they expect. That’s about the same as the average monthly income. Labour says this figure is based on a series of false assumptions.

To get to the £2,400 tax statistic, the Conservative Party estimated costs for all the policies Labour has proposed in both its 2017 manifesto and the two years since. That added up to £1.2 trillion over five years. Based on previous statements by Labour’s Shadow Chancellor, John McDonnell, about which policies he would fund with loans and which with taxes, the Conservatives figured out that £651 billion of this money would come from taxes, and that Labour’s current tax plans would raise less than half of that (£277 billion). So they divided the shortfall by the number of income tax payers in the UK. That resulted in £12,000 per income taxpayer over five years, or £2,400 a year.

But there are several reasons why this might not be how much most actual employees would stump up under a Labour government. For a start, the Labour Party has not yet released its official 2019 manifesto. Parties often ditch older policies when they put together a new manifesto, so Labour might not actually be intending to do all the things the Conservatives included in their figures.

Secondly, dividing an amount of tax revenue by the number of taxpayers doesn’t reflect how income tax works in the UK. Income tax is progressive, which means it's structured so the more you earn, the more you pay. Governments who want to increase or decrease income taxes change the percentage of tax you pay on income over a certain amount. So they might say that for every pound you earn over £50,000 each year, you have to give them 20p or 50p or 99p.

Labour, as a left-wing party, is firmly committed to raising taxes on richer people rather than poorer ones. So even if McDonnell did want to raise an extra £374 billion through taxes, the most likely outcome would be that high earners’ tax bill would go up by significantly more than an extra £2,400 a year, and lower earners would go up by significantly less, if at all.

Read our explainer on: tax.

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Reader Comments

  • WhereAreTheVikings

    What a terrible, terrible shame. Western Civilization nurtured capitalism, and now capitalism is destroying it. And these young people seem to welcome the invasion of their homeland. The media and schools have been very efficient in wiping out all traces of blood and soil.

    • prollawalllynotahumanoid

      Capitalism isn’t the problem. It’s corrupt politicians taking bribes and kickbacks from Globalists and the Chinese.

      • WhereAreTheVikings

        Maybe I should have said crony capitalism. Although Italians importing Chinese to make “Italian leather” shoes is not crony capitalism. It is capitalism, pure and simple.

        • prollawalllynotahumanoid

          That would be crony capitalism and globalism combined. They aren’t concerned with the affect their policies have upon their citizens, the health and welfare of their society and culture or their economy. What it isn’t is fair-free trade to further national interests.

          • WhereAreTheVikings

            I’ve always seen them as one and the same, but perhaps they need to be named individually, just to bring home the point.

      • WhereAreTheVikings

        But now that travel is so easy and borders are virtually down through H1bs and the like, theoretically you can’t blame capitalists for the pursuit of cheaper labor, although I do heartily blame them not being more patriotic than that. Perhaps the emerging nationalism will force them to voluntarily do what they should have morally been doing all along, and that is employing business practices that preserve their countries and nationalities. The government should be doing everything it can to encourage that, to the extent that small government should do anything but guard the borders and strictly, drastically, limit immigration.

      • Henry Lam

        It is China with its corrupted mindset affecting the world.

        • prollawalllynotahumanoid

          No it is not. Capitalism is the fairest and least corrupt system of all.

          Socialism and communism is based on authoritarianism, coercion and police intimidation. It has and always will be rife with criminality, bribes and kickbacks.

          Corruption can be anywhere but it is the very basis of socialism and communism.

    • Henry Lam

      The government is too weak. They do not understand the mindset of communists and how they educate their people. Those communist people are only loyal to their country and could be dangerous. The immigration law should only accept those who accepted multiculturalism and taught from a democratic education system. This virus events clearly has shown how stupid to take China as a friend.

      • WhereAreTheVikings

        The government is not too weak. Just weak-minded about some things.

  • Gabi Rodrigues

    For how many days can a country maximum close their borders to foreigners maximum? Like now, with the virus, everyone is using 30 days. Can it be more?